Is it not true, the onset of the common cold starts with the first three days of symptoms, then a three-day full-blown of feeling lethargic, achy, and possibly in bed, but then followed by three days of progressive recovery? An economic recession is very much like that, and the main point I want to emphasize in this blog is that an economic recession, like the common cold, is temporary. In one of this week's episodes, a financial expert discussed how we can successfully weather an economic downturn called a recession, but it takes preparation on our part. How would you define a recession? In my research a recession can be defined as a downturn or a shrinkage of the economy over a business cycle, often defined by economists as two consecutive quarters of negative gross domestic product, or GDP which occurred in the first two quarters of 2022. However, in this country there is the National Bureau of Economic Research (NBER), who overall make final recession related determinations. NBER takes into account the entire economic landscape such as indicators related to your personal income, employment or the lack thereof, consumer spending, wholesale and retail sales, and industrial productivity. This is fine and dandy, but I would rather look at it from a personal level.
It has been said that when your neighbor loses his job because of economic conditions, it is a Recession, however, when you lose your own job, it is an economic Depression. Like many things, our perspective is relative to us personally no matter how the media spins it with linguistic palatability, in other words utilizing euphemisms to make it easier to swallow what is being said. So, hopefully the following will prepare you to identify the onset of the first three days of the common cold coming on as it were and make necessary decisions to get through the worst and find yourself surviving financially and I must say emotionally as well. The biggest concerns, materially speaking, are your shelter or your home, groceries and transportation that gets you back and forth from your place of employment, and I would say in that order of priority. And of course, we are talking about sufficient employment income to mitigate financial obligations to move forward and eventually find ourselves on the other side of recession. Therefore, first, I would ask myself, how secure is my job? If you find your position becoming less relevant because of economic conditions, it is time to explore other employment opportunities before your position fizzles out. I have found that having two or even three streams of income is the best scenario to surviving financially and you will find the self-employed are in a better position, since they are autonomous and have a better control of personal productivity. I am sure you have heard of the adage of not putting all your eggs in one basket, this is also true when applied in having just one job. To have at least a second stream of income, you will have to analyze your skills or interests to determine what might be a good fit. The last thing you want is to have a second job you hate! Here is a reliable source that may put you on the right path www.sidehustlenation.com. When considering your home, if property values have dipped significantly, it is time to apply for the county to reassess your property taxes for the purpose of adjusting the assessment tax which translate to adding to your personal savings account, and do not worry, the county will reassess free of charge. Additionally, we need to lessen our burden of debt, because that is what it is, a tremendous burden. During a recession when jobs are few and far between, capital is tight, those high debt balances and payments only add unnecessary stress to an already stressful situation. So it’s time to make a plan of action for your financial situation to pay down your debt obligations. Did you know that creditors will collaborate with you by renegotiating the interest rate or even provide a moratorium for a period for the purpose of giving you time to regroup financially? The last thing they desire is for anyone to default on their existing credit balances. This is true for credit cards, and every mortgage company that I know of has a mitigation department that will help you since they are in the business of finance and not in the real estate business, therefore, incentivized to work with you. It is a matter of asking, and I still hold to my personal observation that there are more of those that want to help than those that want to ask for help, it is inexcusable. Also, exercising frugality is not difficult as some may lead you to believe. But to the contrary, a frugal lifestyle is not about pinching the nickel so tight that the Indian ends up riding the buffalo, it is not deprivation of things that bring you joy. But rather, it has to do with making conscious spending decisions that come with very little impact on your personal lifestyle. In fact, adopting this lifestyle will prepare you to succeed through any recession, which incidentally, is an integral part of any economy. Do you have two vehicles? Can you do with just one vehicle? Can you investigate into downsizing your home or apartment? Can you cut back on eating out or that expensive and overrated cup of joe? The key is to live simply, hmm sounds like I have heard that before. I would recommend the cuts that you make financially, are not too extreme and unrealistic, otherwise, it will be almost impossible to sustain this chosen lifestyle. I would compare it to being on an extreme or unrealistic diet where deprivation is never sustainable. Learning how to get by with the basics and making it a way of life regardless of any economic condition is the answer to surviving a recession successfully. The truth of the matter is, a recession is always beyond our control, However, the only thing we can control is how we prepare ourselves for an economic hardship. With precautionary measures in place, you can protect your family and your finances, which will make a world of difference in your financial and emotional state. And any downturn in the economy that we may experience will not be something to fear or dread.
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